SEC INSTITUTES ENFORCEMENT ACTION AGAINST FORMER TOP FINANCIAL OFFICERS AND MANAGERS AT CUC INTERNATIONAL IN CONNECTION WITH MASSIVE FINANCIAL FRAUD AT CUC AND CENDANT CORPORATION - FINANCIAL REPORTING ACTION BROUGHT AGAINST CENDANT

The U.S. Securities and Exchange Commission ("Commission") today initiated civil litigation in the U.S. District Court for the District of New Jersey against four former officers or managers of CUC International Inc. ("CUC"). The Commission also instituted and simultaneously settled administrative proceedings against Cendant Corporation and three former managers of CUC. Cendant was created through the December 17, 1997, merger of CUC and HFS Incorporated. The proceedings and litigation resulted from the Commission's continuing investigation of a long-running financial fraud that began at CUC in the 1980s and continued until its discovery and disclosure by Cendant in April 1998. Upon disclosure of the fraud, the price of Cendant common stock plummeted, causing billions of dollars in losses for investors.

In the first of three separate complaints filed by the Commission today with the U.S. District Court, the Commission alleged violations of the federal securities laws by Cosmo Corigliano, Anne M. Pember, Casper Sabatino, and Kevin Kearney, all former officers or managers of CUC. Corigliano and Pember are contesting the Commission's action.

The Commission's complaint alleges that Corigliano, the Chief Financial Officer of CUC, was one of the CUC senior officers who helped to engineer the fraud. Among other things, the complaint alleges that during the last several years of the fraud, Corigliano was the CUC officer responsible for creating and maintaining a schedule that management used to track the progress of their fraud. Corigliano regularly directed CUC financial reporting managers to make unsupported alterations to the company's quarterly and annual financial results. The Commission alleges, moreover, that Corigliano profited from his own wrong-doing by selling CUC securities and a large number of Cendant securities at inflated prices while the fraud he helped engineer was underway and undisclosed. The complaint alleges that Corigliano, by his actions in furtherance of the fraud, violated, or aided and abetted violations of, the antifraud, periodic reporting, corporate record-keeping, internal controls, and lying to auditors provisions of the federal securities laws. The Commission's complaint seeks an injunction enjoining Corigliano from future violations of those provisions, disgorgement of his ill-gotten gains (plus prejudgment interest thereon), payment of a civil money penalty, and an order permanently barring him from acting as an officer or director of a public company.

The Commission's complaint alleges that Pember, the former CUC Controller, was the CUC officer most responsible for implementing directives received from Corigliano in furtherance of the fraud. Among other things, the complaint alleges that, in January 1998 alone, Pember was responsible for implementing directives that inflated Cendant's annual income by more than $100 million, primarily through improper use of the company's reserves. The Commission alleges that Pember too profited from her own wrong-doing by selling CUC and Cendant stock at inflated prices while the fraud she helped implement was underway and undisclosed. The complaint alleges that Pember, by her actions in furtherance of the fraud, violated, or aided and abetted violations of, the antifraud, periodic reporting, corporate record-keeping, internal controls, and lying to auditors provisions of the federal securities laws. The Commission's complaint seeks an injunction enjoining Pember from future violations of those provisions, disgorgement of her ill-gotten gains (plus prejudgment interest thereon), payment of a civil money penalty, and an order permanently barring her from acting as an officer or director of a public company.

Sabatino and Kearney, without admitting or denying the Commission's allegations, have each consented to the entry of Final Judgments settling the Commission's action against them. The Commission's complaint alleges that Sabatino, a former CUC Vice President of Accounting and Financial Reporting, implemented directives from Corigliano in furtherance of the fraud. Among other things, the Commission's complaint alleges that Sabatino was the CUC officer most responsible for directing lower-level CUC financial reporting managers to make Corigliano's alterations to the company's quarterly financial results. The complaint alleges that Sabatino, by his actions in furtherance of the fraud, violated, or aided and abetted violations of, the antifraud, periodic reporting, corporate record-keeping, internal controls, and lying to auditors provisions of the federal securities laws. Sabatino has consented to entry of a Final Judgment that would enjoin him from future violations of those provisions and permanently bar him from acting as an officer or director of a public company.

The Commission's complaint alleges that Kearney, a former CUC Director of Financial Reporting, also instructed lower-level CUC financial reporting managers to carry out directives received from Corigliano in furtherance of the fraud. Among other things, the Commission alleges that Kearney was regularly present when Corigliano would calculate unsupported alterations to CUC's quarterly results and that, while he was part of the CUC financial reporting operations, Kearney supervised the lower-level managers who actually entered Corigliano's quarterly alterations. The complaint alleges that Kearney also profited from his own wrong-doing, selling CUC and Cendant stock at prices inflated by the fraud he had knowingly assisted. The Commission's complaint alleges that Kearney, by his actions in furtherance of the fraud, violated, or aided and abetted violations of, the antifraud, periodic reporting, corporate record-keeping, and lying to auditors provisions of the federal securities laws. Kearney has consented to entry of a Final Judgment that would enjoin him from future violations of those provisions, order him to pay disgorgement of $32,443 in ill-gotten gains (plus prejudgment interest of $8,234), and order him to pay a civil money penalty of $35,000.

Kearney has also agreed to the issuance of a Commission administrative Order that would be issued subsequent to entry of the Final Judgment and that would bar Kearney from practicing before the Commission as an accountant, with the right to reapply after five years.

U.S. ATTORNEY'S OFFICE FOR THE DISTRICT OF NEW JERSEY ANNOUNCES PLEA AGREEMENTS WITH CORIGLIANO, PEMBER, AND SABATINO

The U.S. Attorney's Office ("USAO") for the District of New Jersey today announced that Corigliano, Pember, and Sabatino had each pleaded guilty to Informations in the U.S. District Court for the District of New Jersey, pursuant to plea agreements between those three individuals and the USAO. Pursuant to his agreement, Corigliano pleaded guilty to a two-count Information charging him with wire fraud and with conspiracy to commit mail fraud, wire fraud, and causing false statements to be made in documents required to be filed with the Commission. Similarly, pursuant to her agreement, Pember pleaded guilty to a one-count Information charging her with conspiracy to commit mail fraud and wire fraud. Sabatino, pursuant to his agreement, pleaded guilty to a one-count Information charging him with aiding and abetting wire fraud.

The Commission today also issued administrative Orders instituting settled administrative proceedings against three lower-level financial reporting or accounting managers at CUC. In the first of the three separate administrative Orders, the Commission found that Steven Speaks, the former Controller of CUC's largest division, violated the corporate record-keeping provisions of the federal securities laws, and aided and abetted violations of the antifraud, periodic reporting, and corporate record-keeping provisions, in connection with actions that he took at the direction of Pember and in furtherance of the fraud. Among other things, the Commission's complaint alleges that Speaks made, or instructed others to make, journal entries that effectuated much of the January 1998 income inflation directed by Pember. Simultaneous with the institution of the administrative proceeding, and without admitting or denying the findings contained therein, Speaks consented to the issuance of the Commission Order, which orders Speaks to cease and desist from future violations of the provisions and bars Speaks from practicing before the Commission as an accountant, with the right to reapply after three years.

The Commission also today filed a complaint in U.S. District Court for the District of New Jersey against Speaks, alleging that Speaks violated, or aided and abetted violations, of the antifraud, periodic reporting, and corporate record-keeping provisions of the federal securities laws and seeking an order requiring Speaks to pay a civil money penalty. Without admitting or denying the Commission's allegations, Speaks has consented to the entry of a Final Judgment that would order Speaks to pay a civil money penalty of $25,000.

In a second separate administrative Order, the Commission found that Mary Sattler Polverari, a former CUC Supervisor of Financial Reporting, violated the corporate record-keeping provisions of the federal securities laws, and aided and abetted violations of the antifraud, periodic reporting, and corporate record-keeping provisions, in connection with actions that she took in furtherance of the fraud. Among other things, the Commission alleges that Polverari, at the direction of Sabatino and Kearney, regularly and knowingly made unsupported alterations to CUC's quarterly financial results. Simultaneous with the institution of the administrative proceeding, and without admitting or denying the findings contained therein, Polverari consented to the issuance of the Commission Order, which orders Polverari to cease and desist from future violations of the provisions and bars her from practicing before the Commission as an accountant, with the right to reapply after three years.

The Commission also today filed a complaint in U.S. District Court for the District of New Jersey against Polverari, alleging that she violated, or aided and abetted violations, of the antifraud, periodic reporting, and corporate record-keeping provisions of the federal securities laws and seeking an order requiring her to pay a civil money penalty. Without admitting or denying the Commission's allegations, Polverari has consented to the entry of a Final Judgment that would order her to pay a civil money penalty of $25,000.

In a third administrative Order, the Commission found that Paul Hiznay, a former Accounting Manager at CUC's largest division, aided and abetted violations of the periodic reporting provisions of the federal securities laws, in connection with actions that he took at the direction of his superiors at CUC. Among other things, the Commission alleges that Hiznay made unsupported journal entries that Pember had directed. Simultaneous with the institution of the administrative proceeding, and without admitting or denying the findings contained therein, Hiznay consented to the issuance of the Commission Order, which orders him to cease and desist from future violations of the provisions.

In a fourth and separate administrative Order issued today, the Commission found that Cendant violated the periodic reporting, corporate record-keeping, and internal controls provisions of the federal securities laws, in connection with the CUC fraud. Among other things, the Commission's Order finds that the company's books, records, and accounts had been falsely altered, and materially false periodic reports had been filed with the Commission, as a result of the long-running fraud at CUC. Simultaneous with the institution of the administrative proceeding, and without admitting or denying the findings contained therein, Cendant consented to the issuance of the Commission Order, which orders Cendant to cease and desist from future violations of the provisions. In fashioning its Order, the Commission recognized remedial acts promptly undertaken by Cendant and cooperation afforded the Commission and other authorities.